1. Field of the Invention
The present invention relates, in general, to systems and methods for hospital cost and performance management, and, more particularly, to software, systems and methods for generating cost savings in hospitals, compensating physicians for services provided, and compensating physicians for otherwise uncompensated services based upon the assumption that projected savings will enhance the financial resources of the hospital thereby enabling the compensation.
2. Relevant Background
Hospitals remain a primary avenue for providing health care in the United States. Although some hospitals employ staff physicians, in most cases the physician is not an employee, and contracts with the hospital for privileges to use the hospital facilities. The contracted-for privileges allow the physician to have patients admitted, use operating rooms and other hospital equipment and facilities, and use shared hospital personnel such as nurses, technicians and the like. The terms of these contracts vary, however, it is typical for such contracts to obligate the physician to provide certain uncompensated services for the hospital. Independent physicians in the United States historically have provided certain uncompensated services to hospitals where they have privileges to admit and treat patients.
Hospitals that receive Medicare funding are required by the U.S. Government under, for example, the Emergency Medical Treatment and Active Labor Act (EMTALA), also titled Consolidated Omnibus Budget Reconciliation Act (COBRA), to provide emergency care to all patients regardless of the patient's ability to pay. This often results in hospitals providing services to some patients without compensation, which is often called “charity care.” It is common practice for hospitals, in-turn, to require physicians that have privileges at their hospital to provide care to hospital patients who cannot pay without compensation.
It is also common for hospitals. to expect and/or require physicians with privileges, especially specialists, to provide on-call services to the hospital emergency room. While on-call, the physician agrees to remain accessible to provide services to the hospital on immediate or short-term notice, whether or not such services are actually needed. While the physicians may be compensated for services actually rendered while on-call, they are not compensated by the hospital simply for being on-call.
In addition, most hospitals expect and/or require physicians to serve on various hospital committees, participate in employee training, and/or attend to other managerial tasks without compensation. Active and enthusiastic participation in such committees are important mechanisms for improving health care services. However, because these tasks are uncompensated it is sometimes difficult to engender the enthusiastic and active participation of the best physicians that are available.
Prior to the advent of what is commonly referred to as “managed care”, physicians were compensated for most of their services at a rate that economically allowed them to provide the above-mentioned services for free. Reimbursement rates to physicians by. Medicare/Medicaid, managed-care programs and other insurance programs generally have been significantly lowered in the past several years. At the same time, costs of doing business such as insurance, marketing, equipment, office space and the like have increased. These factors encourage physicians to spend more of their time providing compensable services (e.g., treating patients) and less time in non-compensable activities. As a result, physicians have less ability to continue to provide charitable services, participate on committees, and the like, that are not compensated. Hence, to continue to achieve the benefits that have historically been provided by uncompensated physician services, there is a need for systems and methods that provide additional compensation for services that have historically been uncompensated.
Hospitals are also under economic pressures due to lower reimbursement rates for their facilities, as well as the burdens of providing uncompensated services such as charity care. Further, the costs of operating a hospital continue to climb. Hence, hospitals often do not have the financial resources to compensate physicians for the traditionally uncompensated services. In many cases, the conflicting economic pressures between hospitals and physicians is causing a strain on the relationship. Both hospitals and physicians will benefit from a solution to these problems.
Another significant effect of these problems is that physicians have little incentive to commit the time and energy required to identify and validate various efficiency improvement activities within a hospital. Identifying, developing, and testing new procedures and/or equipment is often an intensive process that benefits from significant physician involvement. However, since such involvement is not compensated, the commitment to implement such procedures is waning. Hospitals have a difficult time pursuing these efficiency improving activities without physician involvement, and have an even more difficult time in encouraging adoption of new processes and tools when the physicians were not involved in the development phase.
A significant obstacle in a practical solution has been the lack of funds to provide additional compensation and incentives for the activities that have been traditionally uncompensated. Generally, physicians are prohibited from receiving payments, or “gainsharing”, from clinical decisions they directly make that would create cost savings. In July 1999 the Office of Inspector General (OIG) within the Health and Human Services Department issued a Special Advisory Bulletin that stated broad prohibitions against any form of gainsharing which had the effect of putting an end to efforts to build incentive-based cost-savings programs. Gainsharing is a term used to refer generally to a variety of types of financial arrangements between physicians and hospitals that are intended to encourage the physicians to deliver quality care in a cost-effective manner. However, in that same Special Advisory Bulletin the OIG stated that:                “ . . . We note, however, that hospitals may align incentives with physicians to achieve cost savings through means that do not violate section 1128A(b)(1) of the Act. For example, hospitals and physicians may enter into personal services contracts where hospitals pay physicians based on a fixed fee that is fair market value for services rendered, rather than a percentage of cost savings. Such contracts must meet the requirements of the anti-kickback statute (section 1128B(b) of the Act) . . . . ”Hence, the OIG carved out a “safe harbor” of permissible incentive programs largely ignored and undiscovered.        
In January, 2001, the OIG issued a positive opinion with respect to a cost-saving program that described a narrow set of circumstances in which physicians could receive gainsharing payments. Until the development of the present invention, this was the only example of such a transaction receiving a positive advisory opinion from the OIG. This OIG opinion is commonly referred to as the “01-1 opinion”. This particular opinion was limited to gainsharing payments for a given set of procedures and further was limited by how much and how long such payments could be made. Hence, operation in accordance with the 01-1 opinion was only a partial solution to the above-identified problems.
Hence, health care economics and human nature suggest that some form of incentive plan that rewards physicians for participating in cost-savings programs is an effective way to provide health care more efficiently. However, concerns over gainsharing have made prior implementations of such incentive programs impossible. As a result, many inefficiencies continue, creating financial strain on both physicians and hospitals, which in turn cuts into the willingness and ability of all participants in the health care system to provide various services such as that have been traditionally uncompensated. Accordingly, a solution is needed in the form of systems and methods that provide adequate incentives in a legally compliant manner.